Jim Zellmer's View from Madison

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Monthly Archives: August 2013

Ultimately, it’s far too easy to get caught up in the “business model” question, and thereby lose sight of the much more important question of who’s doing the best journalism. NSFWCorp is producing great stuff, as is Business Insider, as is the New York Times. All three of them look as though they’re going to find a way to make that journalism pay, which is fantastic. And here’s something else they all have in common: if one of their writers finds a great story, and needs to spend a lot of time deeply reporting it before it can be published, all of them will make sure that can happen. When it comes to what matters, it turns out that profound differences in business models make much less difference than you might think.

HAVING learned to speak Japanese as a child while Taiwan was under Japanese occupation, he traveled to Japan and studied what was then the premier bike manufacturing economy. A major breakthrough came in 1977 when Giant’s chief executive, Tony Lo, negotiated a deal with Schwinn to begin manufacturing bikes for the iconic American brand.

Schwinn became both Giant’s strength and weakness. Bike sales leapt in the United States during the oil crisis, and after workers at the Schwinn plant in Chicago went on strike in 1980, Giant became a key supplier, making more than two-thirds of Schwinn’s bikes by the mid-1980s.

Then Schwinn decided to find a new source, and in 1987 signed a contract with China Bicycle Company to make bikes in Shenzhen, near Hong Kong. “We were terrified,” Mr. Liu said. Giant relied on Schwinn for 75 percent of its orders, and its survival was at risk.

Giant began focusing on building its own brand, setting up operations in Europe and the United States. Gradually sales of Giant-brand bicycles grew. At the same time Schwinn’s fortunes declined, and it filed for bankruptcy in 1992. The American company was never able to get cheaper production from its China Bicycle investment, said Jay Townley, an industry consultant who was an executive at Schwinn and later Giant’s American arm.

In Bangle’s opinion, many designers talk about innovation, but nobody is really doing it.

“Even concept cars today simply anticipate the next production model coming down the line. Is this innovation? No. And at the end of the day this is what’s preventing car design from moving into a new era,” Bangle said.

He said he has offers to become design director at some automakers, but has turned them down every time.

“Designing cars consumes you; it has a hold on your spirit which is incredibly powerful,” he said. “It’s not something you can do part time, you have do it with all your heart and soul or you’re going to get it wrong.”

While he loved working for BMW, he said “you have to know when to leave the party.”

Driving has been on the decline in the United States since 2004, as researchers have documented every which way. What they still don’t know, though, is precisely why. The answer likely has to do with some messy mix of rising gas prices, changing demographics, new technology, a souring economy and the shifting preferences of Millennial drivers. But it’s tempting to lean on some of those explanations more heavily than others.

The economic theory is a particularly deceptive one. If you believe that driving trends have gone south because the economy has, too, then that means U.S. policy doesn’t need to adjust to a new transportation reality less focused on cars. Wait long enough, and everything will go back to the old normal.

Years will have to pass before we can look back on this moment and know for sure if the decline in driving was primarily a product of the economy or something else. For now, though, the U.S. PIRG Education Fund has proposed a “natural experiment” with the data we do have: vehicle mileage per capita by state. If the economy is a major factor here, then states hardest hit by the recession – with the steepest rise in unemployment – would experience the most significant drop in driving, right? For one thing, unemployed people without jobs to drive to don’t drive as much.

Horace Dediu and Jim Zellmer discuss the pleasures of traversing continents by road. This leads to a grand tour of powertrains, composites, fuel efficiency, regulation and Tesla’s luxury market entry. Which naturally leads to a conversation on emerging auto modularization, apps and ecosystems and where value will accrue. [32MB 67 minute mp3]

The numbers at first glance don’t seem quite so bad as BMW and Mercedes are both registering double-digit sales increases for 2013. But a deeper dive (thanks to GoodCarBadCar and the California New Car Dealers Association) paints a different picture. As the accompanying chart shows, five competitive vehicles are all down significantly against their 2012 sales numbers. Given that overall U.S. auto sales are up by 7.7%, and 12.5% in California, the performance of the Mercedes E-Class, the BMW 5-Series, and the Lexus GS are especially disappointing.

But it’s in the BMW 7-Series and Porsche Panamera that the presence of the Model S is probably being felt most acutely. Both are performance luxury sedans capable of seating families comfortably and both are fairly commonplace in the wealthy neighborhoods of the San Francisco Bay Area. Those neighborhoods are now rife with Teslas. More than 4700 Model S registrations have been recorded in California and at least some are coming at the expense of the competition. Nationally, the Tesla has matched the total sales of the Lexus LS, Audi Audi A8 and Panamera combined.

It’s certainly true that for the moment, BMW and Mercedes are still going to sell plenty of cars. Together, their midsize sedans will have a 5:1 edge over the Tesla in 2013, and much greater if you also include the large sedans in the mix. But by the end of next year, Tesla hopes to double production and deliver as many cars outside the U.S. as it’s selling here. The competition is clearly heating up.

Indeed, the new word in the Stingray’s vocabulary is “structure.” Every good thing about it—its refinement and drivability, the fine-tuning of each of the five driving modes (Eco, Normal, Winter, Sport and Track), the “sportivity,” as the Germans would call it—is thanks primarily to its new rigid cartilage of alloy tubes, panels and extrusions. This is pretty much the technology Scaglietti uses to build the monocoque of the Ferrari 458 (except that car has a stressed aluminum skin); Aston Martin, Jaguar, and Lotus use something similar. Corvette doubters are going to have to show me a better mass-production chassis that is priced anything like a new Stingray ($52,000-$70,000).

Wait, there is actually one. Anybody? The Tesla Model S.

Arcane figures about Stingray’s torsional rigidity translate in the cabin to a sense of things being tightly tamped and torqued down. That is definitely novel for Corvette. The new car is almost entirely cured of Corvette’s distinctive cowl-shake or unpleasant noise, vibration and harshness. In previous ‘Vettes, hitting a big pothole would send an undamped shudder through the structure and, if the car was cornering, it would take a moment to recompose itself and regain the trace. In the C7, such impacts are reduced to a single, tympanic thump, instantly dissipated.

In fuel-saving Eco driving mode, the Stingray can deactivate four of its eight cylinders (itself a neat trick in a cam-in-block V8), helping the base car to lope to a 30-miles-per-gallon highway mileage rating. And yet the fluttering off and on of these cylinders, in this high-compression (11.5:1) V8, is virtually undetectable.

Code, you want code? In order to better calibrate the behavior of the various adaptive driving modes (weather, eco, tour, sport and track)—modulating no less than 12 vehicle systems including the electric steering and magnetic adaptive dampers—the Stingray Z51’s 19- and 20-inch wheels (front/rear) are fitted with tiny temperature sensors, because warm tires behave differently than cold tires. But because these sensing thermocouples heat up more slowly than the air inside the tires, their signals go through a special temperature-estimating algorithm before they are processed by the driving-mode head office.

Re-imagine PunchDub
Every time you encounter another Volkswagen with SmileDrive, you get a punch. At the end of your drive, you’ll learn how many punches you’ve collected.

Earn stickers
You’ll receive stickers for special moments on the road such as late-night rides, extra long hauls and crack-of-dawn commutes.

Get your Smile Score
Each trip ends with a report that includes a Smile Score, which measures the fun factor of that drive.

Share and save Smilecasts
Friends can see where you are, who you’re with and what you’re doing while you’re on your road trip. Once it’s over, your Smilecast is saved so that you can revisit the adventure.

It’s pretty clear that being an NFL head coach isn’t a very easy job. A light day at the office during the season runs about 16 hours. You have to manage and assuage the egos of 53 players, a fair number of whom make more money than you and have way better job security than you. For all the effort you might put into your process, you’re judged entirely by outcomes, some of which might very well be chalked up to players you didn’t want to draft in the first place. And then, when you make a decision in the heat of the moment on Sunday while surrounded by 70,000 fans and weighing hundreds of variables at once, some smart-ass who’s never coached a day in his life picks apart your decisions on Monday.

Doesn’t sound like fun. But Thank You for Not Coaching, the section of our Monday NFL wrapup column1 that breaks down the previous weekend’s coaching decisions, is not meant to be a harsh dismissal of coaching! It’s supposed to be educational, to provide some insight into what the different possibilities are in a given situation and how teams might be able to maximize their opportunities to win football games. I won’t pretend that it can’t get catty at times — sorry, Pat Shurmur — but I think about all the hours that coaches put in and all the collected knowledge they’ve gathered during their years on the job and hate to see them throw all that away by being ultra-conservative at the wrong time. Why make a suboptimal decision because it’s what has always been done?

The average price of one bedroom condominium in San Francisco is $630,000 as of June 2013. This would presumably buy you a mansion in much of the country, but in San Francisco it lands you an 898 square foot condo. And if you’re looking for a little more room, a two bedroom in San Francisco costs $893,000 and a three bedroom $1,235,000. You don’t want to know what a four bedroom costs.